Far fewer Canadian cities meet the traditional affordability standard, where housing costs are less than 30 percent of household income, according to recent data from proptech company Zoocasa.
Reports show that average mortgage payments now take up about 46 percent of household income in Canada, compared to 34.2 percent in the US.
The cost of building a residential building in Canada has also risen 58 percent since 2020 and could rise even further thanks to U.S. tariffs, federal briefing materials show.
One study found that a Canadian home would cost about 14 times the average disposable income in 2024, compared to nine times in the US. By comparison, in mid-2025, the median home price in Los Angeles was 12.5 times the median household income. New York was 9.8 times.
At the end of 2023, the percentage of median household income needed to cover property costs in Toronto was 84.1 percent, well above the national average.
The rising cost of housing is hurting the economy and making it difficult for people to find affordable housing. Many are now leaving cities like Toronto. A poll by Environics Analytics for CTV News shows that 35,000 households left the Greater Toronto Area last year.
The difficult situation could become even worse
A recently released report from RESCON shows that the already poor housing situation in the Greater Toronto Area (GTA) and Greater Golden Horseshoe (GGH) could get worse, as housing starts fell significantly in the first nine months of 2025 and job losses in the industry continue to grow.
The report looked at 34 municipalities and found that housing starts in those municipalities fell by 34 percent in the first three quarters of 2025, compared to the January to September periods in 2021-2024. Apartment starts fell 51 percent in 2025 compared to the same previous periods.
The analysis estimates that the contraction in housing construction that began in the first nine months of this year translates into 35,377 fewer person-years of employment.
The figures in the report are an eye-opener, because they indicate that we are going in the wrong direction.
Projects are being put on hold, which will have a trickle-down effect on the economy. Sales of more than 3,200 new units have been halted between 2020 and 2025. The construction costs are simply too high. Only 54 new apartments were sold in Toronto in October, down from 145 in October 2024.
An editorial in The Globe & Mail noted that construction of new homes in the country’s hottest markets is expected to slow to near zero in five years. So we will have less development, fewer houses and fewer jobs – all at a time when the country needs more housing.
The industry is crucial to the economy
All of this will have a disastrous effect on our economy, as construction will account for 7.5 percent of Canada’s GDP by 2023.
It’s a recipe for disaster. The housing sector is critical to the Canadian economy.
A new report from Concordia University’s John Molson School of Business indicates that improving housing affordability could boost local economies, not just families.
In an illustrative model for Toronto, the report found that a $3 billion housing supply stimulus program could generate an estimated $672 million in recurring annual tax revenues, implying a budget payback in four to five years – even without accounting for further positive multiplier effects.
As Erkan Yönder, associate professor of real estate and finance at Concordia, noted, housing affordability is not only a social issue, but also an economic issue.
“High housing costs affect the entire economy, everything from family finances to business productivity and municipal budgets,” he said in a statement. “With increasing pressures in the Canadian economy, it is important to do everything we can.”
When builders are at work, taxes flow to the government coffers. Workers earn wages, which stimulates the economy. And the new homes give Canadians a place to live.
Governments must do everything they can to get the industry back to work. Construction costs must be reduced, namely by further reducing the exorbitant taxes, levies and levies on new homes. Currently, 36 percent of the costs of a new home can be attributed to the tax burden.
Builders must be able to build homes that people can afford. Our economy depends on it.
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